Exhibit 10.7


 


SEVERANCE AGREEMENT


 


THIS
SEVERANCE AGREEMENT (“Agreement”) is entered into by and between John A. Galea
(“Executive”) and Interval Acquisition Corp., a Delaware corporation (the “Company”),
and is effective as of July 31, 2008 (the “Effective Date”).


 


WHEREAS,
Executive is currently an at-will employee of the Company; and


 


WHEREAS,
the Company and Executive have agreed that Executive shall be entitled to
receive certain severance payments upon the termination of Executive’s
employment by the Company for any reason other than Executive’s death or
Disability or for Cause (as described below).


 


NOW,
THEREFORE, in consideration of the mutual agreements hereinafter set forth,
Executive and the Company have agreed and do hereby agree as follows:


 


1.           TERMINATION BY THE COMPANY
OTHER THAN FOR DEATH, DISABILITY OR CAUSE.


 


(a)                If Executive’s employment is terminated by
the Company for any reason other than Executive’s death or Disability or for
Cause (a “Qualifying Termination”) then (i) the Company shall pay to
Executive an amount equal to twelve (12) months of Base Salary, which
amount shall be payable in equal, biweekly installments (or, if different, in
accordance with the Company’s payroll practice as in effect from time to time)
during the twelve (12)-month period following such Qualifying Termination (the “Severance
Period”); and (ii) the Company shall pay Executive within thirty (30) days
of the date of such Qualifying Termination in a lump sum in cash any Accrued
Obligations (as defined below) (together, the “Severance Payments”). The
payment to Executive of the Severance Payments shall be subject to Executive’s
execution and non-revocation of a general release of the Company and its
affiliates, in a form substantially similar to that used for similarly situated
executives of the Company and its affiliates (the “Release”), and Executive’s
compliance with the restrictive covenants set forth in Section 3 hereof.
Executive acknowledges and agrees that the Severance Payments constitute good
and valuable consideration for the Release.


 


(b)                For purposes of this Agreement, the terms “Base
Salary”, “Cause” and “Accrued Obligations,” and the phrase “termination by the
Company for Disability,” shall have the following
meanings:


 


(i)           “Base Salary” shall mean Executive’s Base Salary as
in effect from time to time during his employment by the Company;


 


(ii)          “Accrued Obligations” shall mean the sum of (A) any
portion of Executive’s accrued but unpaid Base Salary through
the date of death or termination of Executive’s employment for any reason,
including a Qualifying Termination; (B) any compensation previously earned
but deferred by Executive (together with any interest or earnings thereon) that
has not yet been paid and that is not otherwise to be paid at a later date
pursuant to


 

















 


the
executive deferred compensation plan of the Company, if any, and (C) any
reimbursements that Executive is entitled to receive in accordance with
applicable Company policies in effect from time to time;


 


(iii)         “Cause” shall mean: (A) the plea of guilty or
nolo contendere to, or conviction for, the commission of a felony offense by
Executive; (B) a material breach by Executive of a fiduciary duty owed to
the Company; (C) a material breach by Executive of any of the covenants
made by Executive in Section 3 hereof; (D) the willful or gross
neglect by Executive of his material duties; or (E) a violation by
Executive of any Company policy pertaining to ethics, wrongdoing or conflicts
of interest; and


 


(iv)        “termination by the Company for Disability” shall
mean the termination of Executive’s employment by the Company following (A) Executive’s
absence from the full-time performance of his duties with the Company for a
period of four (4) consecutive months as a result of Executive’s
incapacity due to physical or mental illness (“Disability”) and (B) Executive’s
failure to return to the full-time performance of his duties within thirty (30)
days after written notice is provided to Executive by the Company.


 


(c)          Upon any termination of
Executive’s employment other than a Qualifying Termination, the Company shall
have no obligations hereunder, except for the payment of any Accrued
Obligations.


 


2.                  OFFSET. If Executive
obtains other employment during the Severance Period, the amount
of any remaining Severance Payments to be provided to Executive shall be
reduced by the amount of compensation and benefits earned by Executive from
such other employment through the end of the Severance Period. For purposes of
this Section 2, Executive shall have an obligation to inform the Company
regarding Executive’s employment status following a Qualifying Termination and
during the Severance Period.


 


3.                  RESTRICTIVE COVENANTS.


 


(a)          CONFIDENTIALITY. Executive
acknowledges that, during his employment by the Company, Executive will occupy
a position of trust and confidence. The Company and/or its affiliates shall
provide Executive with “Confidential Information” as referred to below.
Executive shall not, except as may be required to perform Executive’s duties or
as required by applicable law, without limitation in time, communicate,
divulge, disseminate, disclose to others or otherwise use, whether directly or
indirectly, any Confidential Information regarding the Company and/or
any of affiliates.


 


“Confidential
Information” shall mean information about the Company or  any of its
affiliates, and their respective businesses, employees, consultants,
contractors, clients and customers that is not disclosed by the Company or any
of its affiliates for financial reporting purposes or otherwise generally made
available to the public (other than by Executive’s breach of the terms hereof)
and that was learned or developed by Executive in the course of  his employment by the
Company or any of its affiliates, including  (without limitation) any
proprietary knowledge, trade secrets, data, formulae, information and client
and customer lists


 


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and all papers, resumes, and records (including
computer records) of the documents containing such Confidential Information.
Executive acknowledges that such Confidential Information is specialized,
unique in nature and of great value to the Company and its affiliates, and that
such information gives the Company and its affiliates a competitive advantage.
Executive agrees to deliver or return to the Company, at the Company’s request
at any time or upon termination of Executive’s employment or as soon thereafter
as possible, all documents, computer tapes and disks, records, lists, data,
drawings, prints, notes and written information (and all copies thereof)
furnished by the Company and its affiliates or prepared by Executive in the
course of Executive’s employment by the Company and its affiliates. As used in
this Agreement, “subsidiaries” and “affiliates” shall mean any company
controlled by, controlling or under common control with the Company.


 


(b)         NON-COMPETITION. In consideration of the Company’s obligation to make the Severance
Payments under certain circumstances (as described in Section 1(a) above)
and other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged by Executive, Executive hereby agrees and covenants
that, during Executive’s employment by the Company and for a period of
twenty-four (24) months thereafter (the “Restricted Period”), Executive shall
not, without the prior written consent of the Company, directly or indirectly,
engage in or become associated with a Competitive Activity. For purposes of
this Agreement, (i) “Competitive Activity” means any business or other
endeavor involving Similar Products if such business or endeavor is in a
country (including the United States) in which the Company (or any of its
businesses) provides or planned to provide during Executive’s employment by the
Company such Similar Products and (ii) “Similar Products” means (A) any
time share or vacation ownership exchange service or program (the “Exchange
Business”); (B) any travel agency, club or service that provides such
services to anyone engaged in the Exchange Business or their members; (C) any
travel agency, club or service that is competitive with the Company’s travel
and leisure membership programs, including, but not limited -to, the
Interval Gold, Leisure Time Passport or LiveItUp membership programs; (D) hotel
management or vacation condominium, hotel condominium, timeshare or rental
property management services; or (E) any other products or services that
are the same or similar to any of the types of products or services that the
Company (or any of its businesses) provides, has provided or planned to provide
during Executive’s employment by the Company. The provisions of subsections
(b)(ii)(B) through (E) shall only apply if Executive has provided
services on behalf of the Company or its affiliates in direct support of the
businesses described in such subsections.


 


Executive shall be considered to have become “associated
with a Competitive Activity” if Executive becomes directly or indirectly
involved as an owner, principal, employee, officer, director, independent
contractor, representative, stockholder, financial backer, agent, partner,
member, advisor, lender, consultant or in any other individual or
representative capacity with any individual, partnership, corporation or other
organization that is engaged in a Competitive Activity. Notwithstanding the
foregoing, Executive may make and retain investments during the Restricted
Period, for investment purposes only, in less than one percent (1%) of the
outstanding capital stock of any publicly-traded corporation engaged in a
Competitive Activity if the stock of such  corporation
is either listed on a national stock exchange or on the NASDAQ National Market
System if Executive is not otherwise affiliated with such corporation.


 


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Executive
acknowledges that Executive’s covenants under this Section 3(b) are a
material inducement to the Company’s entering into this Agreement.


 


(c)                NON-SOLICITATION OF EMPLOYEES. For a period
of thirty-six (36) months following Executive’s termination of employment for
any reason, Executive shall not, without the prior written consent of the
Company, directly or indirectly, hire or solicit or recruit any employee of the
Company, or any of its affiliates with whom Executive has had direct contact
during his employment by the Company, in all cases, for the purpose of being
employed by Executive or by any business, individual, partnership, firm,
corporation or other entity on whose behalf Executive is acting as an agent,
representative or employee and that Executive will not convey any Confidential
Information or trade secrets about employees of the Company or any of its
affiliates to any other person except within the scope of Executive’s duties.


 


(d)         NON-SOLICITATION OF CUSTOMERS. During the Restricted
Period, Executive shall not solicit any customers of the Company or any of its
affiliates or encourage (regardless of who initiates the contact) any such
customers to use the facilities or services of any competitor of the Company or
any of its affiliates.


 


(e)          PROPRIETARY RIGHTS; ASSIGNMENT. All Employee
Developments (defined below) shall be considered works made for hire by
Executive for the Company or, as applicable, its affiliates, and Executive
agrees that all rights of any kind in any Employee Developments belong
exclusively to the Company. In order to permit the Company to exploit such
Employee Developments, Executive shall promptly and fully report all such
Employee Developments to the Company. Except in furtherance of his obligations
as an employee of the Company, Executive shall not use or reproduce any portion
of any record associated with any Employee Development without prior written
consent of the Company or, as applicable, its affiliates. Executive agrees that
in the event actions of Executive are required to ensure that such rights
belong to the Company under applicable laws, Executive will cooperate and take
whatever such actions are reasonably requested by the Company, whether during
or after his employment by the Company, and without the need for separate or
additional compensation.


 


“Employee
Developments” means any idea, know-how, discovery, invention, design, method,
technique, improvement, enhancement, development, computer program, machine,
algorithm or other work of authorship, whether developed, conceived or reduced
to practice during or following Executive’s employment by the Company, that (i) concerns
or relates to the actual or anticipated business, research or development
activities, or operations of the Company or any of its affiliates, or (ii) results
from or is suggested by any undertaking assigned to Executive or work performed
by Executive for or on behalf of the Company or any of its affiliates, whether
created alone or with others, during or after working
hours, or (iii) uses, incorporates or is based on Company equipment,
supplies, facilities, trade secrets or inventions of any form or type. All
Confidential Information and all Employee Developments are and shall remain the
sole property of the Company or any of its affiliates. Executive shall acquire
no proprietary interest in any Confidential Information or Employee
Developments developed or acquired his employment by the Company.  To the extent
Executive may, by operation of law or otherwise, acquire any right, title or
interest in or to any Confidential Information or Employee Development,
Executive hereby assigns and covenants to assign to the Company all such


 


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proprietary
rights without the need for a separate writing or additional compensation.
Executive shall, both during and after his employment by the Company, upon the
Company’s request, promptly execute, acknowledge, and deliver to the Company
all such assignments, confirmations of assignment, certificates, and
instruments, and shall promptly perform such other acts, as the Company may
from time to time in its discretion deem necessary or desirable to evidence,
establish, maintain, perfect, enforce or defend the Company’s rights in
Confidential Information and Employee Developments.


 


4.                  NOTICES. All notices
and other communications under this Agreement shall be in writing and shall be
given by first-class mail, certified or registered with return receipt
requested, or by hand delivery, or by overnight delivery by a
nationally recognized carrier, in each case to the applicable address set forth
below, and any such notice is deemed effectively given when
received by the recipient (of if receipt is refused by the recipient, when so
refused):


 


	
  If
  to the Company:

  	
   

  	
  Interval
  Acquisition Corp.  

  c/o Interval International, Inc. 

  Attention: General Counsel 

  6262 Sunset Drive  

  Miami, Florida 33143

  
	
   

  	
   

  	
   

  
	
  If
  to Executive:

  	
   

  	
  At
  the most recent address on file at the Company.

  



 


Either
party may change such party’s address for notices by notice duly given pursuant
hereto.


 


5.                  GOVERNING LAW; JURISDICTION. This Agreement
and the legal relations thus created between the parties hereto (including,
without limitation, any dispute arising out of or related to this Agreement)
shall be governed by and construed under and in accordance with the internal laws of the
State of Florida without reference to its principles of conflicts of
laws. Any such dispute will be heard and determined before an appropriate federal
court located in the State of Florida in Miami-Dade County, or, if not
maintainable therein, then in an appropriate Florida state court located in Miami-Dade
County, and each party hereto submits itself and its property to the
non-exclusive jurisdiction of the foregoing courts with respect to such
disputes. Each party hereto (i) agrees that service of process may be made
by mailing a copy of any relevant document to the address of the party set forth
above, (ii) waives to the fullest extent permitted by law any objection
which it may now or hereafter have to the courts referred to above on the
grounds of inconvenient forum or otherwise as regards any dispute between the
parties hereto arising out of or related to this Agreement, (iii) waives
to the fullest extent permitted by law any objection which it may now or
hereafter have to the laying of venue in the courts referred to above as
regards any dispute between the parties hereto arising out of or related to
this Agreement and (iv) agrees that a judgment or order of any court
referred  to above in connection with any dispute between the
parties hereto arising out of or related to this
Agreement is conclusive and binding on it and may be
enforced against it in the courts of any other jurisdiction.


 


6.                  SECTION 409A OF THE
INTERNAL REVENUE CODE. This Agreement is
not intended to constitute a “nonqualified deferred compensation plan” within
the meaning of


 


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Section 409A
of the Internal Revenue Code of 1986, as amended, and the rules and
regulations issued thereunder (“Section 409A”). Notwithstanding the
foregoing, if this Agreement or any amounts or benefits payable to Executive
hereunder is subject to Section 409A and if the Executive is a “Specified
Employee” (as defined under Section 409A) as of the date of Executive’s
termination of employment, then the payment of such amounts or benefits, if
any, scheduled to be paid by the Company to Executive hereunder during the
first twelve (12) month period beginning on the date of a termination of
employment shall be delayed during such twelve (12) month period and shall
commence immediately following the end of such twelve (12) month period
(and, if applicable, the period in which such payments were scheduled to be
made if not for such delay shall be extended accordingly). In no event shall
the Company be required to pay Executive any “gross-up” or other payment with
respect to any taxes or penalties imposed under Section 409A with respect
to any amounts or benefits paid to Executive hereunder.


 


7.                  SURVIVAL OF PROVISIONS. The
obligations contained in Section 3 shall, to the extent provided in Section 3,
survive a Qualifying Termination and, as applicable, shall be fully enforceable
thereafter in accordance with the terms of this Agreement. If it is determined
by a court of competent jurisdiction that any restriction in Section 3 is
excessive in duration or scope or is unreasonable or unenforceable under
applicable law, it is the intention of the parties that such restriction may be
modified or amended by the court to render it enforceable to the maximum extent
permitted by applicable law.


 


8.                  TERMINATION OF PRIOR
AGREEMENTS. This Agreement constitutes the entire
agreement between the parties and, as of the Effective Date, terminates and
supersedes any and all prior agreements and understandings (whether written or
oral) between the parties with respect to the subject matter of this Agreement.
Executive acknowledges and agrees that neither the Company nor anyone acting on
its behalf has made, and is not making, and in executing this Agreement,
Executive has not relied upon, any representations, promises or inducements
except to the extent the same is expressly set forth in this Agreement.


 


9.                  ASSIGNMENT; SUCCESSORS. This Agreement
is personal in its nature and none of the parties hereto shall, without the
consent of the others, assign or transfer this Agreement or any rights or obligations hereunder; provided, that the
Company may assign this Agreement to, or allow any of its obligations to be
fulfilled by, or take actions through, any affiliate of the Company and, in the
event of the merger, consolidation, transfer, or sale of all or substantially
all of the assets of the Company (a “Transaction”) with or to any other
individual or entity, this Agreement shall, subject to the provisions hereof,
be binding upon and inure to the benefit of such successor and such successor
shall discharge and perform all the promises, covenants, duties, and
obligations of the Company hereunder, and in the event of any such assignment
or Transaction, all references herein to the “Company” shall refer to the
Company’s assignee or successor hereunder.


 


10.                WITHHOLDING. The Company shall make such
deductions and withhold such amounts from each payment and benefit made or
provided to Executive hereunder, as may be required from time to time by applicable law, governmental regulation or order.


 


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11.                COUNTERPARTS. This Agreement may be
executed in several counterparts, each of which shall be deemed to be an
original but all of which together will constitute one and the same instrument.


 


12.                HEADING REFERENCES. Section headings
in this Agreement are included herein for convenience of reference only and
shall not constitute a part of this Agreement for any other purpose.


 


13.                REMEDIES FOR BREACH. Executive
expressly agrees and understands that Executive will notify the Company in
writing of any alleged breach of this Agreement by the Company, and the Company
will have thirty (30) days from receipt of Executive’s notice to cure any such
breach. Executive expressly agrees and understands that in the event of a
Qualifying Termination, the Company’s contractual obligations to Executive
shall be fulfilled through compliance with its obligations under Section 1
of this Agreement.


 


Executive
expressly agrees and understands that the remedy at law for any breach by
Executive of Section 3 of this Agreement will be inadequate and that
damages flowing from such breach are not usually susceptible to being measured
in monetary terms. Accordingly, it is acknowledged that, upon Executive’s
violation of any provision of Section 3, the Company shall be entitled to
obtain from any court of competent jurisdiction immediate injunctive relief and
obtain a temporary order restraining any threatened or further breach as well
as an equitable accounting of all profits or benefits arising out of such
violation. Nothing shall be deemed to limit the Company’s remedies at law or in
equity for any breach by Executive of any of the provisions of this Agreement,
including Section 3, which may be pursued by or available to the Company.


 


14.                WAIVER; MODIFICATION. Failure to
insist upon strict compliance with any of the terms, covenants, or conditions
hereof shall not be deemed a waiver of such term, covenant, or condition, nor
shall any waiver or relinquishment of, or failure to insist upon strict
compliance with, any right or power hereunder at any one or more times be
deemed a waiver or relinquishment of such right or power at any other time or
times. This Agreement shall not be modified in any respect except by a writing
executed by each party hereto.


 


15.                SEVERABILITY. In the event that a court
of competent jurisdiction determines that any portion of this Agreement is in
violation of any law or public policy, only the portions of this Agreement that
violate such law or public policy shall be stricken. All portions of this
Agreement that do not violate any statute or public policy shall continue in
full force and effect. Further, any court order striking any portion of this
Agreement shall modify the stricken terms as narrowly as possible to give as
much effect as possible to the intentions of the parties under this Agreement,


 


[The Signature Page Follows]


 


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IN WITNESS WHEREOF, the Company has caused this
Agreement to be executed and delivered by its duly authorized officer and
Executive has executed and delivered this Agreement on this 31st day of July, 2008.


 


	
   

  	
   

  	
  Interval
  Acquisition Corp.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  Craig M. Nash

  
	
   

  	
   

  	
  By:
  

  	
  Craig
  M. Nash

  
	
   

  	
   

  	
  Title:
  

  	
  President
  and

  
	
   

  	
   

  	
   

  	
  Chief
  Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  /s/
  John A. Galea

  
	
   

  	
   

  	
  John
  A. Galea

  



 


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